Bahamas Hotel Operators Decry 2013 Economic Decline

Some Bahamas resorts have a reputation for high prices, but try telling that to operators. High utility costs, increased capital spending and barriers to price increases caused more Bahamas hotels to lose money in 2013 than in the previous two years, according to data from the Bahamas Hotel and Tourism Association (BHTA).

According to the BHTA’s 2013 Industry Performance and 2014 Outlook Survey, 47 percent of responding Bahamas hotels reported a net loss in 2013, up from 33 percent in 2012. The hoteliers cited “high utility costs, investments in capital improvements and constraints on price increases as key factors affecting profits.”

BHTA also reported that “preliminary results indicate a year-over-year decline Bahamas-wide of 3.5 percent in room occupancy.” Furthermore, the Bahamas hotel industry’s “performance indicators” remained “below the benchmark years” of 2007 and 2008.

“The results mirror the industry’s hotel performance and overall visitor arrivals data for 2013” said Stuart Bowe, BHTA’s president. “This tells us that more needs to be done to increase [overnight] visitor numbers.” Bowe noted that the Bahamas’ ministry of tourism has not yet released complete 2013 hotel occupancy data.

Yet despite the declining numbers, the report characterized 2013 as “a mixed picture.” The report found that average room rate grew 4.7 percent for Bahamas hotels in 2013 compared with 2012.

Indeed, the report suggests regional factors are responsible for the results posted by Bahamas hotels and resorts. “In general, Family Island and Grand Bahama hotels reported marginal revenue and occupancy improvements while Nassau-Paradise Island hotels saw small declines in performance,” the survey found.

Bahamas hoteliers have expressed “a higher level of business confidence,” regarding 2014, according to the survey, which reports a “97 percent confidence level for 2014” due to “an improving global economy, national infrastructural improvements, property upgrades, and new foreign direct investment.”

Despite the expression of confidence, Bowe said airlift, taxes on tourism suppliers, high utility costs and competition from “lower-cost destinations” continue to threaten Bahamas hoteliers’ profitability. The issues require “collaboration between the public and private sectors,” said Bowe.

Already home to some of the hospitality’s industry’s largest warm-weather resorts, including Atlantis Paradise Island, the Bahamas is preparing for another major room infusion with the December debut of the $3.5 billion Baha Mar resort.

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